Michael LoBue writes: Recently I’ve been comparing the “performance indicators” between AMC-managed organizations to standalone organizations. The comparison is between certain common indicators found in the ASAE’s 13th Edition of the Operating Ratio Report (ORR — 2006-2007 data) and the AMC Institute’s Client Operating and Financial Benchmarking Survey Report of 2007. While not all of the data are in complete alignment across the two studies, I think three of the indicators do lend themselves to valid comparisons.
The Data:
Those familiar with ASAE’s ORR know the organizations were studied by type (e.g., trades vs. societies — as were the AMC-managed organizations) and by revenue size (e.g., <$1M, $1M - $2M, $2M - $5M, etc.). The Institute’s study involving 311 AMC-managed organizations is divided into smaller ranges. The comparisons below are between the 71 >$1M AMC-managed organizations to the 73 standalone organizations between $1M and $2M in annual revenue.
| Key Performance Ratios |
ASAE $1M - $2M (73) |
AMCI > $1M (71) |
|
Net Profitability (Total Revenue minus Total Expenses as a % of Total Revenue) |
4.8% | 8.4% |
|
Operating Efficiency Ratio (Total Revenue divided by Total Assets) |
1.3% | 1.3% |
|
Leverage (Total Liabilities divided by Total Fund Balance) |
0.8 | 0.3 |
Conclusion:
- Net Profitability — AMC-managed organizations are almost twice as profitable as standalone organizations (also more profitable for AMC-managed organizations <$1M in annual revenue);
- Operating Efficiency Ratio — AMC-managed organizations are just as efficient as standalone organizations across all revenue sizes compared;
- Leverage — Standalone organizations are almost twice as leveraged as AMC-managed organizations for all revenue sizes compared (leverage in this sense translates into operating risks).
Why Does This Matter?
I think this matters because it brings into focus for association leaders real data that they can use to determine if they are being as prudent as possible in the governance and stewardship of their organizations. This data support what so many of the thousands of association leaders with direct experience using the AMC-model already know — that the model is not just cost efficient, it’s also effective!
This is also cross-posted on Association Voices blog site….
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